Burlington Stores, Inc. — Form 10-K Summary
Reporting period: The supplied filing is for the 52-week fiscal year ended January 29, 2022 (Fiscal 2021), not 2020 Q4 as indicated in the request metadata. Fiscal 2020 ended January 30, 2021. Burlington is an off-price retailer; it operated 840 stores in 45 states and Puerto Rico at fiscal year-end.
Key financial results
| Metric | Fiscal 2021 | Fiscal 2020 |
|---|---|---|
| Net sales | $9.307 billion | $5.752 billion |
| Total revenue | $9.322 billion | $5.764 billion |
| Net income (loss) | $408.8 million | ($216.5 million) |
| Diluted EPS | $6.00 | ($3.28) |
| Gross margin | 41.6% | 38.2% |
| Operating cash flow | $833.2 million | $219.2 million |
- Sales rose 61.8% year over year, substantially reflecting the prior-year temporary closure of all stores during COVID-19, and contributions from 79 net new stores. Comparable store sales increased 15% in Fiscal 2021 using Fiscal 2019 as the comparison; Fiscal 2020 comparable sales were not meaningful due to closures.
- Gross margin improved from the prior year, principally because Fiscal 2020 included a $271.9 million inventory markdown charge related to store closures and aged inventory. Increased freight and other supply-chain costs partially offset the improvement.
- Adjusted EBITDA, a non-GAAP measure, was $1.051 billion versus negative $62.7 million in Fiscal 2020. Fiscal 2021 net income included $156.0 million of debt-extinguishment charges.
- Cash and cash equivalents were $1.091 billion at year-end, plus $6.6 million of restricted cash. Working capital was $593.4 million, down from $820.0 million. Cash, cash equivalents and restricted cash decreased $289.2 million during the year.
- Debt at year-end included $950.7 million under the term loan facility and $572.3 million of convertible notes; finance lease obligations were $43.9 million. The ABL facility had no borrowings and $594.6 million available. Operating lease liabilities were $2.898 billion.
Material changes, outlook and risks
- During Fiscal 2021, Burlington redeemed $300 million of 6.25% secured notes and exchanged or repurchased $232.7 million principal amount of convertible notes. Debt-extinguishment charges included $124.6 million on convertible-note transactions and $30.2 million on the secured-note redemption. The term loan maturity was extended to June 2028.
- The company repurchased $250 million of shares in Fiscal 2021. After year-end, the board authorized an additional $500 million repurchase program. Burlington does not anticipate near-term cash dividends.
- Management planned approximately 90 net new stores in Fiscal 2022 (about 120 gross openings and 30 relocations or closures) and approximately $725 million in capital expenditures, net of expected landlord allowances. No earnings or comparable-sales forecast is provided in the supplied filing text.
- Long-term strategy includes a 2,000-store target, smaller store formats, leaner store inventories, expanded merchandising capabilities, and further investment in stores and supply-chain capacity. A new New Jersey distribution center was expected to begin storage operations in Fiscal 2022 and processing and shipping in Fiscal 2023.
- Management cited continuing uncertainty from COVID-19, inflation, freight and labor costs, supply-chain disruption, staffing, competition, consumer spending, and weather. The company said operating cash flow, existing cash and its ABL facility should fund expected requirements for at least the next 12 months, while warning that results and liquidity remain exposed to external factors.
- The company expected a one-time $245.5 million federal tax refund related to carrying back Fiscal 2020 tax losses; it was included in prepaid and other current assets. The filing also reports litigation matters, including potential wage-and-hour, consumer and privacy claims, but management did not expect their resolution to materially affect results or financial position.
- Deloitte issued an unqualified opinion on the financial statements and internal controls. The auditor identified inventory markdown timing as a critical audit matter; this was not a separate adverse opinion.
Important facts for investors to verify
- Compare Fiscal 2021 sales and margins with Fiscal 2019 as well as Fiscal 2020, given the pandemic-affected prior-year base and the company’s use of Fiscal 2019 for comparable-sales measurement.
- Track whether freight, labor and inflation costs ease or continue to pressure margins, and whether leaner inventory and markdown management deliver the intended benefits.
- Assess the company’s ability to fund its planned $725 million of Fiscal 2022 capital spending and store growth while maintaining liquidity and servicing debt and lease obligations.
- Review the terms, dilution implications and cash costs of convertible-note exchanges, the post-year-end exchange agreement, and the new share-repurchase authorization.
- Confirm receipt and timing of the expected $245.5 million tax refund, and monitor inventory valuation, litigation exposures and other contingencies.